The majority of FTSE 350 companies will cease defined benefit (DB) pension provision to all employees within two to three years, according to new research.
Companies are reacting to the combination of difficult economic conditions, rising pension costs and increasingly aggressive pension regulations by closing pension schemes to future and even current employees. Already, more than a third of all FTSE 350 companies do not have a DB pension scheme. The decline in DB pension provision is reflected in the total service cost in the latest FTSE 350 accounts of £8.0 billion, which compares to £9.4bn in 2007.
Charles Cowling, managing director of Pension Capital Strategies, which carried out the survey, said: “The total pension deficit in the FTSE 350 pension schemes is estimated to be £102bn at the end of June 2009. This figure has increased from £34bn three years ago, despite FTSE 350 companies paying £19 billion of deficit funding into their pension schemes over this period. This shows the ever-growing tension with DB pension provision in the FTSE 350.”
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